Seattle Employers: Get Ready for Paid Sick and Safe Leave

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1 Seattle Employers: Get Ready for Paid Sick and Safe Leave March 8, 2012 Materials prepared by: Katheryn Bradley 1420 Fifth Avenue, Suite 4100 Seattle, Washington Copyright 2012 Lane Powell PC These materials are intended to provide general information and are not intended as legal advice applicable to any particular situation /

2 Seattle Employers: Get Ready for Paid Sick and Safe Leave On September 12, 2011, the Seattle City Council passed an ordinance mandating paid leave for employees who perform work in Seattle. Mayor Mike McGinn signed the ordinance into law on September 23, According to press reports, This bill is about ensuring healthier workplaces by preventing the spread of disease. However, the ordinance casts a wide net, mandating paid sick leave when an employee s family member is sick, as well as paid leave when an employee or his or her family member needs safe time because of domestic violence, sexual assault or stalking. And it broadly defines family member to include spouses, domestic partners, children, parents, parents-in-law and grandparents. According to the Greater Seattle Chamber of Commerce, the ordinance is a complex, bureaucratic and prescriptive mandate for employers. The ordinance is twenty-nine pages of mandates and complex definitions, some of which borrow from state laws, such as the Family Care Act and the Domestic Violence, Sexual Assault and Stalking Leave Act. However, those definitions can easily create confusion and, in at least one case, ambiguity. The ordinance also appears to conflict in several respects with federal laws, such as the Family and Medical Leave Act and ERISA. The following discussion highlights some of the ordinance s requirements. 1. When must employers begin offering paid leave to Seattle employees? The ordinance becomes effective on September 1, Which businesses are covered by the law? The ordinance applies to all businesses with five or more employees in any location. Businesses operating for less than two years are also exempted. In counting employees, fulltime, part-time and temporary workers supplied by a staffing agency are included, but workstudy students are excluded. 3. Which employees are covered by the law? Employees are covered if they perform work in the City of Seattle and work for a business with five or more employees. An employee who occasionally works in Seattle is covered if he or she works more than 240 hours in Seattle within a calendar year. 4. Can an employer with covered employees avoid the requirements of the ordinance? An employer may enter into a bona fide collective bargaining agreement that clearly and unambiguously waives the requirements of the ordinance. However, this is a narrow exception; any waiver by an individual is contrary to public policy and will be deemed void and unenforceable. 2

3 5. When does paid sick and safe time begin to accrue? For covered employees who are employed on the effective date, leave begins accruing immediately on September 1, Accrual rates do not apply to hours worked before the ordinance takes effect. For employees hired after the ordinance s effective date, paid leave begins to accrue when employment begins. 6. Is there a waiting period before a covered employee may use paid safe and sick time? Yes. The ordinance imposes a waiting period of 180 calendar days. An employee may use paid leave beginning on the 180th calendar day after their employment begins, regardless of the number of hours worked. If an employee separates employment but is rehired within seven months, the previous period of employment is counted in determining the waiting period, so long as the total time of employment occurs within two calendar years. Likewise, if an employee is rehired within seven months of separation, he or she is entitled to reinstatement of previously accrued sick and safe leave and may use that leave immediately without being subject to the 180 day waiting period. These rules do not apply to employees who are rehired after a separation longer than seven months. 7. When may a covered employee use available paid sick time? For the employee s own mental or physical illness, injury or health condition; To accommodate the employee s need for medical diagnoses or treatment of a mental or physical illness, injury or health condition; For the employee s need for preventive care; To allow the employee to provide care to a family member with a mental or physical illness, injury or health condition; To allow the employee to provide care to a family member who needs medical diagnosis, care or treatment of a mental or physical illness, injury or health condition; or To allow the employee to provide care to a family member who needs preventive medical care. 8. Who are considered family members for the purposes of sick time? The definition of family member is borrowed from the Washington Family Care Act, RCW and Generally, those provisions define family member to include a child, spouse, domestic partner, parent, parent-in-law, or grandparent. Under the ordinance, 3

4 domestic partner also includes partnerships registered with either the City of Seattle or State of Washington. 9. When can a covered employee use available paid safe time? When the employee s place of business has been closed by order of a public official to limit exposure to an infectious agent, biological toxin or hazardous material; To accommodate the employee s need to care for a child whose school or place of care has been closed by order of a public official for such a reason; To enable the employee to seek legal or law enforcement assistance or remedies to ensure the health and safety of the employee or the employee s family members including, but not limited to, preparing for, or participating in, any civil or criminal legal proceeding related to or derived from domestic violence, sexual assault, or stalking; To enable the employee to seek treatment by a health care provider for physical or mental injuries caused by domestic violence, sexual assault, or stalking, or to attend to health care treatment for a victim who is the employee s family member; To enable the employee to obtain, or to assist a family member in obtaining, mental health counseling related to an incident of domestic violence, sexual assault, or stalking, in which the employee or the employee s family member was a victim of domestic violence, sexual assault, or stalking; or To enable the employee to participate in safety planning, temporarily or permanently relocate, or take other actions to increase the safety of the employee or employee s family members from future domestic violence, sexual assault, or stalking. 10. Who are considered family members for the purposes of safe time? The ordinance requires safe time be granted to an employee to care for family members who are victims of domestic violence, sexual assault or stalking. However, the ordinance does not specifically define family members. Instead, the ordinance states for the purposes of determining eligibility for paid safe time, Family or household members shall mean, as defined in RCW , spouses, domestic partners, former spouses, former domestic partners, persons who have a child in common regardless of whether they have been married or have lived together at any time, adult persons related by blood or marriage, adult persons who are presently residing together or who have resided together in the past, persons sixteen years of age or older who are presently residing together or who have resided together in the past and who have or have had a dating relationship, persons sixteen years of age or older with whom a person sixteen years of age or older has or had had a dating relationship, and persons who have a biological or legal parent-child 4

5 relationship, including stepparents and stepchildren and grandparents and grandchildren. This broad definition includes household members with whom an employee may not have a biological or legal relationship. The ordinance also uses a definition of domestic violence that includes injuries, sexual assault, or stalking involving family and household members. It is not clear how this ambiguity will affect enforcement of the ordinance. In addition, employers should be careful in administering their policies because the sick and safe leave provisions have different definitions of family members, adding to the confusion. 11. Does an employee have to provide advance notice when requesting sick or safe time? Yes. If the need for time off is foreseeable, the employee must request leave at least ten days, or as early as possible, in advance of the paid leave, unless the employer s normal notice policy requires less advance notice. The employee must also comply with the employer s usual and customary notice and procedural requirements for absences or leave, so long as those requirements do not interfere with the purposes for which leave is needed. If the need for leave is not foreseeable, the employee must provide notice as soon as practicable and otherwise comply with the employer s normal requirements, so long as those requirements do not interfere with the purposes for which leave is needed. If your company does not have an attendance and tardiness policy that identifies how employees should report when they will be out of the office or late to work, it is recommended as a best practice in light of the ordinance. An employer may allow accrued sick and safe time to be used in hourly increments or smaller increments if an employer so designates. The ordinance does not expressly restrict employers from requiring sick or safe time be used in increments greater than one hour, such as four hours or eight hours. 12. How much paid time must an employer provide to covered Seattle employees? The accrual rate for paid sick and safe time depends on the size of a business. The business is measured by the average number of full time equivalent ( FTE ) employees during the preceding calendar year for any and all weeks in which at least one employee worked for compensation. FTE is defined to mean the number of hours worked for compensation that add up to one full-time employee, based either on an eight-hour day and a five-day week or as full-time is defined, in writing or in practice, by the employer. This means that an employer who adopts a definition of full-time employee in its employee handbook for other purposes will be bound by that definition for the purposes of determining FTE s under the ordinance. For example, for the purposes of qualifying for health insurance benefits, some employers define full-time employee at a lower threshold than 40 hours per week. Under the ordinance, to determine the number of FTE s, all compensated hours of all employees are counted, including those who work outside of the City of Seattle. The business must also include compensated hours made available by part-time employment, 5

6 temporary employment or through the services of a staffing agency or similar entity; however, these staffing agency employees are not considered employees of the business for other purposes. Businesses fall into three tiers for leave accrual purposes, depending on the average number of FTE employees paid for per calendar week. Tier Employer Size Paid Leave Accrual Rate Cap and Mandatory Carry Over One 5 to 49 FTE One hour for every 40 hours worked 40 hours Two FTE One hour for every 40 hours worked 56 hours Three 250 or more FTE One hour for every 30 hours worked 72 hours 13. How does paid sick and safe time accrue for exempt employees since they are not typically compensated on an hourly basis? To determine the hours that an employee works for the purposes of leave accrual, the ordinance creates two classifications of employees: (a) employees who are exempt from overtime payment under the Fair Labor Standards Act ( FLSA-exempt employees ); and (b) employees who are not exempt under the FLSA. The ordinance then establishes rules for determining the hours worked by these two classifications: Employees who are not exempt under the FLSA accrue Seattle sick and safe time on the basis of actual hours worked during the workweek. For FLSA-exempt employees, Seattle sick and safe time accrues on the basis of a 40- hour workweek. FLSA-exempt employees do not accrue additional leave if they work more than a 40-hour workweek. If an FLSA-exempt employee works less than 40 hours in a normal work week, Seattle sick and safe time will accrue based upon that employee s normal workweek. Unfortunately, the Seattle ordinance fails to recognize that some employees may be exempt under the FLSA, but are treated as non-exempt employees because they do not qualify for an exemption under Washington s Minimum Wage Act. Unless this drafting error is corrected, employers will need to identify which non-exempt employees qualify for an exemption under the FLSA, but do not qualify under the MWA-exemptions. Such employees will need to be treated as FLSA-exempt employees for the purposes of leave accrual. 14. Can an employee borrow paid leave that has not yet accrued? Yes. An employer may loan paid sick and safe leave to an employee in advance of accrual by such employee. However, the employer is not required to loan paid time off before it accrues. 6

7 15. May an employer require a signed doctor s note to verify the employee s need for sick time? It depends. According to the Seattle ordinance, an employer may ask an employee to provide documentation signed by a health care provider indicating that sick time is necessary only if the employee uses paid sick time for the employee s own illness that exceeds three consecutive days. The ordinance specifically states, An employer may not require that the documentation explain the nature of the illness. In addition, the ordinance requires an employer who does not offer employee health insurance benefits to pay one-half of the outof-pocket expenses incurred in obtaining the documentation; however, an employee who has declined to participate in an employer s health insurance program is not entitled to such reimbursement. These restrictions would prevent an employer from requiring documentation when an employee misses work for illness regularly on Mondays or Fridays. Because the ordinance does not state whether it refers to consecutive calendar days or working days, it is not clear whether an employer may request documentation when an employee misses work for illness on Thursday, Friday and Monday. This issue may be addressed in guidance that the Seattle Office of Civil Rights (SOCR) has promised to issue to assist employers. Because of the Seattle ordinance s restrictions, employers must now be cautious when requesting such information for employees subject to the Seattle ordinance. If the reason for seeking such information is permitted or required by federal or state law, however, the Seattle ordinance may be pre-empted. 16. What documentation may an employer require an employee to provide to substantiate the employee s need for safe time? If an employee takes safe time because a school, business or child care has been closed by a public official to limit exposure to an infectious agent, biological toxin or hazardous material, the employer may ask for a copy of the closure notice. If an employee takes safe time because the employee or the employee s family member is a victim of domestic violence, sexual assault, or stalking, an employer may request documentation. The ordinance identifies the documentation that may substantiate the request, which includes an employee s written statement explaining that the paid safe time was taken for one of the purposes covered by the ordinance. 17. How does this ordinance affect employers with a PTO plan? An employer who has a combined or universal paid leave policy, such as a PTO policy, is not required to provide additional paid sick and safe time, so long as the employer s policy meets the following requirements: Available paid sick and safe time can be used for the same purposes and under the same conditions; 7

8 Paid sick and safe time must accrue at rates equal to (or greater than) the ordinance s accrual rates (see chart above); Employees must be able to use combined sick and safe time at cap and carry over rates equal to (or greater than) the ordinance s caps (see chart above), except that Tier Three employers must allow 108 hours to be used and carried over to the following year. 18. Does the ordinance require an employer to pay out unused sick and safe time upon the employee s separation from employment? No. The ordinance specifically states that by requiring paid leave to accrue and carry over, it shall not be construed to require financial or other reimbursement to an employee upon an employee s termination, resignation, retirement or other separation from employment. However, as a practical matter, most employers in Washington who have adopted PTO policies allow unused PTO to be cashed out upon separation, although some employers may restrict the circumstances. As a practical matter, this means that employers with PTO plans should carefully review their policies to avoid unintended consequences. 19. How is a covered employee compensated when using paid sick or safe leave? The employee must be compensated at the same rate that he or she would have earned during hours that the employee was scheduled to have worked. However, the employee is not entitled to lost tips or commissions. 20. During paid sick or safe leave, is the employee entitled to receive other benefits? Yes. The employee is also entitled to receive the same benefits, including health care benefits, he or she would have received while working. This means that during paid sick or safe leave required by the ordinance, an employer must continue health care coverage on the same terms. If this conflicts with the health insurance plan, the Seattle ordinance may be preempted by ERISA. Significantly, Washington s Leave for Victims of Domestic Violence, Sexual Assault, or Stalking Act, RCW 49.76, which mandates unpaid leave for the same reasons that the Seattle ordinance mandates safe leave, requires continuing coverage during such leave to the extent allowed by law. WAC May an employee trade shifts or make up missed work to avoid using available paid time? Yes. If the employer agrees, an employee may work additional hours or shifts during the same or next pay period without using available paid sick or safe time for the original missed hours or shifts. However, the employer may not require the employee to work additional hours or shifts. For employees working in an eating or drinking establishment, the employer may offer the employee substitute hours or shifts. The employee may decline the offer without ramifications. If the employee accepts the offer, the employer may deduct the amount of 8

9 time worked during the substitute period or the amount of time requested for sick and safe time, whichever is smaller, from the employee s accrued sick and safe time. Importantly, the ordinance does not alter the overtime compensation rules for non-exempt employees. This means that an hourly non-exempt employee who works additional hours or shifts must be paid overtime compensation for hours exceeding 40 in a workweek, consistent with state and federal wage and hour laws. 22. Does the ordinance impose any recordkeeping requirements on employers? Yes. The ordinance requires employers to track the amount of paid time available to each employee for use as sick time or safe time and provide this updated information to employees in writing through a reasonable system, such as pay stubs or an online system. The employer must also retain records for two years documenting hours worked in Seattle, accrued paid sick and safe time, and paid sick and safe time taken by employees. If an employer does not maintain adequate records, or does not allow the Seattle Office of Civil Rights with reasonable access to such records, the employer is presumed to have violated the ordinance. The ordinance also requires employers to provide notice to employees of their entitlement to paid sick and safe time and other rights. The SOCR is directed to create and make available a poster and a model notice that may be posted at the workplace. Alternatively, an employer may comply with the notice and posting requirements by including information in an employee handbook or other written guidance, which may be distributed electronically. 23. Does the ordinance impose any confidentiality requirements? Yes. The ordinance requires employers to maintain the confidentiality of information provided by an employee who seeks sick or safe time, including health information, the fact that an employee or family member is a victim of domestic violence, sexual assault or stalking, or that the employee has requested or obtained leave. The ordinance also requires records relating to medical certifications to be maintained as confidential medical records in separate files from the employee s personnel file. An employer may not disclose information given by an employee without the employee s consent, unless ordered by a court or administrative agency or otherwise required by law. 24. Does the ordinance provide legal protections to employees who use or seek to use sick or safe time? Yes. The Seattle ordinance creates broad legal protections for employees who exercise their right to use paid sick or safe time, similar to other laws. An employer is prohibited taking adverse action, or discriminating or retaliating against an employee because the employee has in good faith exercised his or right to use paid sick of safe time, filed a complaint with the SOCR for violating the ordinance, informed his or her employer, union, similar organization or legal counsel about an alleged violation, cooperated in an investigation, 9

10 opposed an unlawful practice, or informed other employees of his or her potential rights under the ordinance. The ordinance specifically forbids an employer from counting paid sick or safe time as an absence that may lead to or result in adverse action, such as under a nofault attendance policy. 25. Does the ordinance provide an enforcement mechanism for employees to file claims against employers? An employee who believes his or her employer has violated the sick and safe leave ordinance may file charges with the SOCR within 180 days of the alleged violation. The SOCR Director may also file charges against an employer. The employer will be allowed to respond to the charge by submitting a position statement or evidence. SOCR will conduct an investigation, which may include subpoenaing witnesses and documents, and will then determine whether probable cause exists to believe the ordinance has been violated. The charging party may appeal a determination of no reasonable cause. Where probable cause is found, SOCR will seek to eliminate the unlawful practice through conciliation. Relief may include back pay for up to two years preceding the filing of the charge and other damages, except that damages for humiliation and mental suffering are capped at $10,000. If conciliation fails, SOCR will deliver the investigative file to the City Attorney who will then prepare a complaint for de novo hearing before the Seattle Human Rights Commission. 26. What should an employer do now to prepare for the Seattle sick and safe leave ordinance? If your company has five or more employees, and any employees working full-time in Seattle, a written policy allowing paid sick and safe time will be required. Now is the time to begin preparing your policy to ensure that it meets the ordinance s numerous requirements prior to the effective date of the ordinance, September 1, If your company has a use it or lose it policy that requires employees to use sick leave or PTO before year end, prepare to transition to a policy that allows some sick leave or PTO to carry over to the following calendar year. If your company has a PTO policy, consider whether this approach continues to meet your business needs. If your company permits accrued but unused PTO to be cashed out upon termination of employment, consider whether to modify the policy in light of the carry over requirements. If your company has a no-fault attendance policy, modify it so that employees are not penalized for using paid sick and safe leave. If your company requires doctor s notes for an employee s prolonged illness or sporadic attendance, make sure that your policy and practices comply with the ordinance. 10

11 Consider having your policies and practices reviewed by experienced legal counsel to avoid the penalties and charges permitted under the ordinance. 11

12 Katheryn Bradley Katheryn Bradley is an employment lawyer who has advised local and national employers on complying with Seattle s Sick & Safe Leave Ordinance, including how to address the ordinance s limitations on Paid Time Off policies, and how to resolve conflicts between the ordinance and other state and federal leave and disability accommodation laws. Katheryn devotes a substantial part of her practice to counseling managers and human resource professionals in organizations of all sizes. She advises clients on best practices to manage leave and navigate through the interactive process to accommodate disabled employees. She helps employers avoid claims by preparing effective workplace policies and counseling them through reductions in force, separations and terminations. Katheryn works closely with business executives to enforce non-competition agreements and respond to cease and desist letters. Katheryn also provides interactive EEO training to managers, and frequently speaks at employment law seminars. 12